PROBLEMS 
REAL  ESTATE 


BY 

PHILIP  A.  BENSON 

AND 

NELSON  L.  NORTH,  JR. 

—  ■    *  •  ■  •  '  >•  ii  ii,  1/ 
ici  Fm<  .v uz 

LExiriQton  2  -  4080  N.  Y.  C« 


NEW  YORK,  N.  Y. 

PRENTICE-HALL,  Inc. 
1928 


izx  iCihrta 


SEYMOUR  DURST 


IVhen  you  leave,  please  leave  this  book 

Because  it  has  been  said 
"Sver'thing  comes  t'  him  who  waits 

Except  a  loaned  book.'' 


Avery  Architectural  and  Fine  Arts  Library 
Gift  of  Seymour  B.  Durst  Oud  York  Library 


PROBLEMS 
IN   REAL  ESTATE 


BY 

PHILIP  A.  BENSON 

AND 

NELSON  L.  NORTH,  JR. 


K.  G00DK1ND 

REAL  ESTATMN8URANCE 

101  PARK  AVENUE 
LExinatori  2-4080  N.Y.C 


Uiiiiil'iHiffl 


NEW  YORK,  N.  Y. 

PRENTICE-HALL,  Inc. 
1928 


Copyright  1921,  by 
PRENTICE-HALL,  IVG 
All  rights  reserved 


PREFATORY  NOTE 


These  problems  are  intended  for  use  by  students.  While  they 
may  be  used  as  a  basis  for  a  real  estate  course  they  have  been 
prepared  primarily  for  use  in  conjunction  with  the  authors'  text- 
book "Real  Estate  Principles  and  Practices."  To  that  end  they 
are  uniform  in  chapter  arrangement.  It  is  believed  that  these 
problems,  which  are  actual  situations  arising  in  the  real  estate  busi- 
ness will  be  found  helpful  in  impressing  upon  the  student's  mind, 
the  principles  stated  in  the  text-book.  The  authors  desire  to  ac- 
knowledge their  indebtedness  to  Mr.  Richard  P.  Ettinger  of  the 
Xew  York  Bar  and  member  of  the  faculty  of  New  York  Uni- 
versity for  some  of  the  problems  which  were  adapted  from  prob- 
lems prepared  by  him. 

P.  A.  Benson, 
N.  L.  North,  Jr. 


PROBLEMS  IN  REAL  ESTATE 


Chapter  I 
INTRODUCTORY 

1.  A  owns  a  number  of  houses  which  he  wishes  to  sell.  B  makes 
an  offer  for  one  of  them  which  A  verbally  accepts,  with  the  under- 
standing that  they  are  to  meet  next  day  to  sign  a  contract.  Later 
in  the  same  day,  A  hears  that  B  was  anxious  to  get  the  house  and 
would  have  paid  a  larger  price  for  it.  Should  A  go  through  with 
the  deal  at  the  agreed  price?  Suppose  that  it  was  a  plot  of  land 
being  sold  and  that  A  knew  B  expected  to  erect  an  apartment  house 
on  the  plot  and  also  knew  that  the  land  had  been  filled  in  within  a 
few  years  and  could  not  support  a  heavy  building.  Should  A  inform 
B  as  to  the  character  of  the  soil  before  making  the  sale? 

2.  X  finding  a  one-family  house  for  sale,'  examines  it  and  con- 
cludes that  by  the  expenditure  of  a  certain  sum  of  money,  it  can  be 
converted  into  a  three-family  house,  which  will  sell  for  a  price  that 
will  pay  him  a  profit  over  the  original  price  and  the  cost  of  altera- 
tions. He  buys  the  house  for  that  purpose.  In  what  branch  of  the 
Real  Estate  business  is  he  engaging? 

3.  Suppose  after  the  alteration  was  completed  X  found  that  the 
house  would  earn  a  good  income  from  the  rents,  and  retained  it. 
In  what  branch  of  the  business  is  he  then  engaged? 

4.  A  who  owns  a  house  and  lot  has  contracted  to  sell  it  to  B. 
He  wrishes  to  remove  the  following  articles  from  the  premises.  Ad- 
vise him  as  to  his  rights  and  duties. 

Rose  bushes  in  a  flower  bed. 
The  coal  range  in  the  kitchen. 
The  living  room  chandelier. 
The  furnace  shovel  and  poker. 

The  living  room  lamp  which  is  attached  to  a  wall  plug. 
The  stair  carpet. 

5.  A  enters  into  an  agreement  with  B,  his  son,  who  is  impecu- 
nious, whereby  B  is  to  have  the  use  of  a  house  and  lot  for  life. 
Is  B's  interest  real  property  or  personal  property?  Is  the  father's 
interest  real  or  personal  property?  Suppose  the  agreement  pro- 
vided that  B  might  have  the  use  of  the  property  for  thirty  years, 
would  that  change  your  answer  ? 

6.  You  are  a  real  estate  agent,  managing  an  apartment  house  for 
the  owrner  who  has  several  times  said  he  might  plan  to  sell  the 
house.   As  part  of  your  employment  you  are  authorized  to  negotiate 


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6 


PROBLEMS  IN  REAL  ESTATE 


and  sign  leases  for  the  owner.  You  know  that  long  term  leases 
given  to  the  tenants  may  hurt  a  sale.  One  of  the  tenants  whose  lease 
is  about  to  expire  conies  to  you  and  asks  for  a  three-year  renewal 
lease.   What  should  you  do  ? 

7.  A  purchases  a  farm  near  the  city,  consisting  of  twenty  acres 
of  land  with  a  house  at  one  corner.  He  occupies  the  house,  and 
permits  the  land  to  lie  idle,  hoping  the  city  will  eventually  grow 
out  to  his  land.  After  ten  years  he  finds  no  ready  sale  for  the 
farm,  so  fences  off  a  portion  occupied  by  the  house  which  he  con- 
tinues to  occupy  as  his  home  and  after  subdividing  the  balance  of 
the  farm,  sells  it  in  lots.  In  what  branches  of  real  estate  has  he 
engaged  ? 

8.  A  who  owns  a  lot  at  a  summer  resort  places  on  it  a  small 
bungalow  which  rests  upon  four  small  concrete  blocks.  Later  he 
agrees  to  sell  the  lot,  receives  a  deposit  and  removes  the  house. 
The  purchaser  seeks  your  advise.    Advise  him. 

9.  A  who  owns  a  house  and  lot,  dies  giving  to  his  widow  the 
right  to  use  the  property  during  her  life.  She  not  wishing  to  occupy 
it  leases  it  to  B  for  ten  years.  Discuss  the  interests  of  the  widow 
and  B  as  to  whether  they  are  real  or  personal  property. 

10.  A  builder  of  a  row  of  one- family  houses,  advertises  them  as 
of  high-grade  construction.  A  buyer  after  moving  in  finds  a  door 
has  warped  so  that  it  cannot  be  closed,  that  there  is  a  small  leak  in 
the  roof  and  that  a  waste  pipe  is  stopped  up.  The  buyer  complains 
of  these  conditions  and  also  complains  that  the  wall  paper,  which  he 
selected  did  not  make  the  rooms  look  as  he  expected.  What  should 
the  builder  do? 

Chapter  II 
INTERESTS  IX.  LAND 

1.  A  owns  a  plot  of  ground  which  he  has  for  some  years  held 
at  a  price  of  $50,000.  The  City  needs  this  land  for  a  courthouse. 
Can  the  City  acquire  this  property?  How?  What  price  must  the 
City  pay  for  the  property  ? 

2.  Your  building  has  become  dilapidated  and  in  danger  of  falling 
down.    Has  the  Municipality  any  right  to  interfere?  Wiry? 

3.  Your  father  has  just  died  leaving  a  will  by  which  he  gives 
his  property  to  you.  He  left  him  surviving  his  widow  (your 
mother),  and  two  grandchildren  who  are  the  daughters  of  your 
deceased  sister.  Who  takes  the  real  property?  Name  the  means 
by  which  it  passes. 


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8 


PROBLEMS  IN  REAL  ESTATE 


4.  In  the  above  problem  who  would  take  the  real  property  if 
your  father  had  left  no  will?    Name  the  means  by  which  it  would 

pass. 

5.  In  problem  3  suppose  your  father  had  left  no  widow  and  no 
heirs.  Who  would  take  the  real  property?  Name  the  means  by 
which  it  would  pass. 

6.  In  each  of  the  following  problems,  name  the  interest  of  the 
grantor  and  grantee  or  grantees.  State  the  rights  and  limitations 
Upon  the  interests  of  each  party. 

a.  X  grants  Whiteacre  to  A,  his  heirs  and  assigns  forever. 

b.  X  grants  W  hiteacre  to  A. 

c.  X  grants  Whiteacre  to  A  during  the  life  of  B,  and  upon 

B's  death  to  pass  to  C. 

d.  X  grants  Whiteacre  to  A  for  life,  then  to  B  for  life  and 

at  the  death  of  both  A  and  B,  to  C  and  his  heirs  forever. 

e.  X  grants  Whiteacre  to  A  and  B  and  their  survivor. 

f.  X  grants  Whiteacre  to  A  and  B. 

g.  A  and  B  own  as  joint  tenants.    B  grants  his  interest 

to  C. 

h.  X  grants  Whiteacre  to  A  and  B,  his  wife. 

i.  X  grants  Whiteacre  to  A,  B  his  wife,  and  C. 

J.  X  grants  Whiteacre  to  B  provided  B  abstains  from  the 
use  of  tobacco. 

k.  X  grants  Whiteacre  to  B  forever,  provided  that  if  the 
property  be  ever  used  as  a  dance  hall  it  shall  revert  to 
X  or  his  heirs. 

1.  X  grants  Whiteacre  to  A  for  life,  then  to  B  and  his  heirs 
forever. 

m.  X  grants  Whiteacre  to  A  for  life,  and  to  his  children  at 
his  death  provided  that  if  A  leave  no  children,  it  shall 
go  to  B. 

n.  A  and  B  his  wife  own  as  tenants  by  the  entirety.  A  grants 
to  C. 

7.  Mrs.  Jones  owns  Whiteacre  and  sells  it  to  you.  Air.  Jones 
knows  nothing  about  the  sale.  Airs.  Jones  then  dies.  What  interest 
has  Air.  Jones  in  the  property?  Would  the  birth  of  a  child  to  Air. 
and  Airs.  Jones  alter  your  answer? 

8.  Airs.  Brown  owns  Blackacre.  She  dies  intestate  survived  by 
her  husband  and  three  children.  How  does  the  property  pass? 
Suppose  she  had  given  the  property  by  will  to  Air.  Smith?  How 
then  does  the  property  pass  ? 


CO 


10 


PKOiiLKMS   IX   REAL  INSTATE 


Chapter  III 
LIEXS 

1.  I  Tow  docs  a  lien  differ  from  a  conveyance  of  real  property? 

2.  Of  what  advantage  is  a  lien  to  the  lienor? 

3.  Of  what  disadvantage  is  a  lien  to  the  owner  of  the  property 
affected  by  it  ? 

4.  A,  an  owner,  contracts  with  B  to  have  B  tile  the  halls  and 
bathrooms  of  a  new  building.  B  completes  his  work  but  A  claims 
that  he  is  unable  to  pay  him.   What  can  B  do  to  enforce  his  claims? 

5.  Suppose  that  A  (Problem  4)  is  insolvent  and  that  claims  of  a 
number  of  contractors  on  his  building  are  unpaid.  What  are  their 
respective  rights  ? 

6.  Suppose  that  B  (Problem  4)  was  merely  a  subcontractor  of 
C  who  had  the  contract  to  erect  the  entire  building  for  A  and  that 
all  the  agreed  price  except  $1,000  had  been  paid  to  C.  What  rights 
would  B  have  against  A  ? 

7.  What  may  an  owner,  who  wishes  to  sell  his  property  free 
from  encumbrances,  do  regarding  claims  of  contractors  pending 
litigation  with  the  contractors? 

8.  A  sues  B  and  recovers  a  judgment.  B  owns  the  house  in 
which  he  lives  and  also  a  farm  in  an  adjoining  county.  How  may 
A  enforce  the  judgment  against  B's  property? 

9.  Suppose  B  (Problem  8)  appeals  the  judgment.  Can  he  sell 
his  farm  pending  the  appeal?  Why? 

10.  Suppose  that  the  judgment  (Problem  8)  is  enforced  against 
B's  property  but  that  eight  months  later  he  inherits  enough  money 
to  pay  the  judgment.  He  wishes  to  recover  his  property.  How 
would  you  advise  him? 

11.  A  dies  leaving  a  gross  estate  of  $100,000  consisting  principally 
of  real  estate.  His  son,  who  is  his  sole  heir,  contracts  to  sell  one 
of  the  houses  in  the  estate  free  and  clear  of  incumbrances.  There 
are  unpaid  debts  of  $5,000.  How  should  he  arrange  the  affairs  of 
the  estate  so  as  to  carry  out  the  contract  of  sale? 

12.  A  corporation  contracts  to  sell  a  piece  of  property  to  X.  X 
instructs  you  to  ascertain  whether  the  corporation  has  paid  its 
franchise  taxes.  Is  this  necessary?  Howt  would  you  obtain  the 
information? 

13.  The  B  Company  agreed  with  the  C  Corporation  to  furnish 
material  and  perform  labor  for  the  installation  of  a  steam  heating 


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12 


l'l'<  >i:l.KMS   IX    RRAL  R  ST  ATE 


plant  in  the  building  of  the  C  Corporation.  The  i>  Company  pur- 
cliascd  the  risers  and  radiators  from  the  P  Company  under  an 
agreement  whereby  the  title  to  the  material  did  not  pass  until  paid 
for.  This  conditional  hill  of  sale  was  not  filed.  The  C  Corporation 
did  not  pay  the  B  Company  and  later  a  mortgage  on  the  property 
was  foreclosed.  Can  the  P  Company  remove  the  risers  and  radiators 
from  the  building? 

14.  What  is  an  easement?   What  is  a  restriction? 

15.  A  mortgaged  his  house  to  B  on  Janiiary  17th,  1921.  On 
Apyil  1st  he  contracted  to  sell  the  house  to  C.  On  April  15th  D 
dockets  a  judgment  against  A.  On  May  1st  taxes  become  due  and 
payable.  On  May  2d  the  deed  from  A  to  C  is  delivered  which  C 
holds  and  places  on  record  on  May  10th.  On  May  5th  E  files  a 
mechanic's  lien  against  the  property.  Discuss  the  respective  rights 
of  the  parties  mentioned. 

Chatter  IV 
TAXES  AND  ASSESSMENTS 

1.  What  is  the  difference  between  taxes  and  assessments? 

2.  Explain  in  detail  the  steps  taken  by  the  City  of  New  York  in 
levying  taxes  against  a  piece  of  property. 

3.  Distinguish  between  assessment  and  assessed  valuation. 

4.  Name  the  separate  tax  levies  which  may  affect  a  piece  of 
property  in  a  rural  county. 

5.  A  owns  a  lot  50  x  100  feet  on  G  Street  which  is  taxed  by 
the  City  on  an  assessed  valuation  of  $4,000.  B  owns  the  adjoining 
lot  of  the  same  size  which  the  City  taxes  on  the  basis  of  $5,000. 
B  asks  your  advice.    How  should  he  proceed? 

6.  Suppose  that  the  lots  (Problem  5)  were  both  valued  by  the 
City  at  the  same  figure  but  that  A  had  a  frame  house  on  his,  valued 
by  the  City  at  $1,000,  while  B  had  a  brick  house  valued  by  the  City 
at  $5,000.  B  says  the  valuation  of  the  house  is  excessive.  What 
would  you  advise  him  to  do? 

7.  The  local  authorities  upon  appropriate  notice  take  certain  land 
for  the  extension  of  a  highway.  Are  the  owners  paid  for  the  land"J 
If  so,  who  pays?    How  is  the  money  collected? 

8.  Five  owners  of  land  in  a  certain  block  decide  to  petition  the 
City  to  pave  the  streets.  Will  the  City  do  this?  If  so,  how  is  the 
expense  paid? 


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14 


J'kOI'.LHMS   IN   KKAL  INSTATE 


9.  When  do  taxes  Ik-coidc  a  lien  on  real  property?  Assessments? 
Water  rates?  If  title  to  property  is  being  passed  from  seller  to 
buyer  who  pays  current  taxes  and  water  rates?  Who  pays  the 
charge  for  a  street  improvement  just  completed? 

10.  Explain  the  method  of  selling  property  to  pay  arrears  of 
taxes. 

Chapter  V 
CONTRACTS 

h  Why  is  the  contract  the  most  important  paper  in  a  real  estate 
sale  or  exchange?    State  reasons  for  having  it  in  writing. 

2.  A  verbally  agrees  to  purchase  a  lot  from  B  for  $1,000.  Later 
the  deed  and  money  are  exchanged.  A,  several  days  after  demands 
the  return  of  his  money.    What  are  the  rights  of  the  parties? 

3.  A  states  to  you  that  he  is  the  Executor  of  the  will  of  B,  who 
died  owning  Whiteacre.  He  then  as  such  executor  offers  the  prop- 
erty to  you  at  a  price  you  are  willing  to  pay.  What  should  you 
do  before  entering  into  a  contract  with  him  ? 

4.  A  who  is  20  years  of  age  signs  a  contract  to  sell  you  Blackacre 
for  $20,000.  You  pay  a  deposit  of  $2,500  on  the  contract.  A  spends 
the  money,  then  refuses  to  carry  out  the  contract.  What  are  your 
rights  ? 

5.  A,  the  seller  and  B,  the  purchaser,  verbally  agree  upon  terms 
of  sale.    Can  either  enforce  this  agreement? 

6.  The  next  day  B  pays  A  $50.00  on  account  and  receives  A's 
receipt  reading  as  follows :  "Received  on  account  of  sale  of  No.  10 
Court  St.  $50.00,''  signed  A.  Can  either  now  enforce  the  agree- 
ment ? 

7.  A  father  in  a  letter  offers  his  daughter  a  house  if  she  will 
agree  to  remain  single  for  five  years.  The  daughter  writes  her 
father  accepting  his  offer  and  demands  the  deed.  The  father  re- 
fuses.   What  are  the  daughter's  rights  ? 

8.  A  owns  a  plot  of  land  which  he  contracts  to  sell  to  B. 

a.  B  thinks  there  is  valuable  ore  in  the  ground  and  is  buying 

for  the  purpose  of  mining  it.  A  thinks  there  is  no  ore 
in  the  ground.    Is  this  a  binding  contract? 

b.  B  thinks  there  is  valuable  ore  in  the  ground  and  is  buying 

for  the  purpose  of  mining  it.  A  knows  that  B  thinks 
so  and  having  previously  sunk  several  shafts  knows  that 
there  is  no  ore  in  the  ground.   Is  this  a  binding  contract? 


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4  \   3      C  * 


PROBLEMS  IN  REAL  ESTATE 


c.  B  thinks  that  the  land  contains  valuable  ore  and  can  be 

profitably  mined.  A  knows  that  B  thinks  so.  B  thinks 
that  A  intends  to  sell  it  as  such.  Is  this  a  binding  con- 
tract? 

d.  B  thinks  that  the  land  contains  valuable  ore  and  can  be 

profitably  mined  and  thinks  that  A  intends  to  sell  it 
as  such.  A  knows  that  B  thinks  that  he  (A)  is  repre- 
senting that  the  land  contains  valuable  ore  but  does  not 
mean  to  make  such  representation  and  in  the  contract 
has  merely  stated  that  he  is  selling  the  land.  Is  this  a 
binding  contract  ? 

9.  Name  the  elements  which  must  be  present  in  any  legal 
contract. 

10.  A  the  owner  of  a  house,  has  verbally  agreed  to  sell  it  to  B. 
B  desires  to  occupy  it  himself  as  soon  as  he  can  and  A  knows  the 
fact.  The  house  at  present  is  occupied  by  a  tenant  whose  lease  does 
not  expire  for  two  years.  The  contract  is  drawn  and  signed  and 
states  that  the  property  is  to  be  sold  "subject  to  the  rights  of  the 
present  tenant.''  Later  B  ascertains  the  length  of  the  lease  and 
consults  you.    Advise  him  as  to  his  rights. 

1 1.  A,  the  owner  and  B,  the  purchaser,  reach  an  agreement  as  to 
price  and  terms.  B  then  pays  $200  on  account  and  receives  from  A 
the  following  receipt  signed  by  A.  "Received  from  B  $200  on 
account  of  the  sale  of  No.  621  East  11th  Street,  Chicago,  111.;  Price 
$10,000;  purchaser  to  give  a  purchase  money  mortgage  for  $5,000 
and  pay  $5,000  in  cash."  Is  this  writing  sufficient  to  constitute  a 
binding  contract  ? 

12.  A  owns  premises  200  First  Street.  B  looks  at  premises  200 
South  First  Street  which  he  thinks  A  owns.  He  goes  to  A  and 
makes  him  an  offer  in  the  following  words :  "I  will  give  you  $10,000 
for  your  house  at  number  200."  A  accepts  the  offer.  Is  this  a 
binding  contract? 

13.  A  contract  of  sale  is  drawn  and  executed  from  which  is 
omitted  the  date  of  the  contract  and  the  names  of  the  parties.  Alay 
any  rights  be  based  on  such  a  writing? 

14.  Assume  that  property  values  in  general  are  declining.  A, 
the  owner  of  a  piece  of  property,  is  about  to  sell  it  to  B.  You  are 
asked  by  A  to  draw  the  contract.  Would  you  seek  a  large  or  small 
deposit  and  why?  If  property  values  were  rising  how  would  you 
advise  A? 

15.  Why  should  the  purchaser  seek  some  evidence  that  the  seller 


9  r 


J8  PROBLEMS  IN  REAL  ESTATE 

has  title  when  he  makes  a  contract  with  him  for  the  purchase  of 
land? 

16.  What  evidence  of  title  is  usually  adduced  for  this  purpose? 

17.  Describe  by  "metes  and  bounds"  the  following  vacant 
property : 


/oo' 


Zo' 


18  Describe  by  monuments  the  following  property  which 
tains  about  100  acres: 


20 


PROBLEMS  IX  REAL  ESTATE 


19.  Describe  by  "Map,  plot  or  plan"  a  plot  in  the  following 
diagram : 

MAP  OF  LAND  OF  ESTATE  OF  ANTHONY  BROWN,  DECEASED,  FILED  IN 
COOK  COUNTY  CLERK'S  OFFICE,  JANUARY  3,  UJ2J. 


/ 

2 

Met 

3 

6 

7 

g 

/ 

z 

3 

6 

7 

20.  Why  is  a  description  by  natural  monuments,  such  as  trees, 
stumps,  rocks,  etc.,  dangerous? 

21.  Assume  that  you  represent  the  seller  of  a  lot  upon  which 
stands  a  building  which  not  only  fills  the  entire  lot  but  encroaches 
two  inches  on  the  adjoining  lot,  how  would  you  describe  the  property 
in  the  contract  ? 

22.  Assume  that  you  represent  the  seller  of  a  lot  upon  which  an 
adjoining  building  encroaches  two  inches.  How  would  you  draw 
the  description? 

23.  Why  is  it  important  to  state  in  the  contract  the  encumbrances 
subject  to  which  the  property  is  sold? 

24.  A  contract  of  sale  is  drawn  stating  that  the  property  is  sold 
"subject  to  the  rights  of  present  tenants."  What,  if  any,  alteration 
in  this  statement  should  the  seller  desire?   The  purchaser? 

25.  John  Brown  agrees  to  sell  a  house  to  Henry  White  for 
$100,000.  At  present  there  is  affecting  the  property  a  first  mort- 
gage of  $60,000  bearing  interest  at  5%  due  January  1,  1924,  and 
a  second  morgage  of  $20,000  bearing  interest  at  6%  due  July  1, 
1924.  It  is  agreed  that  White  shall  pay  $20,000  cash  over  and 
above  the  mortgages,  of  which  he  shall  pay  $2,000  when  the  con- 
tract is  signed  and  the  balance  at  the  closing.  Draw  up  that  part 
of  the  contract  which  expresses  these  financial  terms. 

26.  If  in  the  foregoing  you  were  White  would  you  prefer  to  take 
the  property  subject  to  the  mortgages  or  would  you  prefer  to 
assume  the  mortgages  ? 


12 


PROBLEMS  IN  REAL  ESTATE 


27.  Assume,  in  the  26th  problem,  that  White  had  only  $10,000 
in  cash,  how  might  he  arrange  to  pay  the  balance? 

28.  A  has  agreed  to  sell  his  property  to  B  for  $40,000.  It  is 
subject  to  a  $20,000  mortgage  due  July  1,  1924,  with  interest  at 
5j/2%-  The  parties  have  agreed  that  L>  shall  give  back  on  the 
closing  his  bond  and  purchase  money  mortgage  for  $10,000  to  run 
for  three  years  with  interest  at  6%,  and  is  to  pay  $10,000  in  cash 
of  which  $2,000  is  to  be  paid  on  signing  the  contract. 

a.  Draw  a  financial  statement  for  insertion  in  the  contract 

which  should  be  satisfactory  to  the  seller. 

b.  Draw  a  financial  statement  for  insertion  in  the  contract 

which  should  be  satisfactory  to  the  purchaser. 

29.  A,  who  is  about  to  sell  his  property,  brings  to  you  for 
examination  a  proposed  contract  of  sale  and  asks  your  advice  before 
he  signs  it.  It  provides  that  the  amount  payable  on  closing  shall  be 
paid  in  cash  or  certified  check.    Advi.se  him. 

30.  A,  the  seller,  brings  you  for  examination  a  contract  of  sale 
which  has  been  duly  executed  but  which  omits  any  mention  of  a 
day  and  place  of  closing  title.    Advise  him. 

31.  Why  is  it  customary  to  insert  the  following  provision  in 
contracts  of  sale :  "Rents  and  interest  on  mortgages  and  fire  insur- 
ance premiums,  if  any,  are  to  be  apportioned." 

32.  B,  the  purchaser  of  a  piece  of  property,  consults  you  with 
reference  to  the  proper  provision  to  insert  in  the  contract  with 
reference  to  taxes  and  water  rates.  State  what  information  you 
would  seek  from  him  and  the  advice  you  would  give  him  based  on 
such  information. 

33.  Is  it  necessary  to  have  a  contract  of  sale  signed,  sealed,  wit- 
nessed and  acknowledged  ? 

34.  What  is  the  advantage  of  having  a  contract  sealed? 

35.  A  contract  of  sale  is  about  to  be  signed  in  your  office.  Would 
you  have  it  witnessed  and  acknowledged  ?    Why  ? 

36.  State  a  reason  for  the  insertion  of  each  of  the  following 
provisions  in  a  contract  of  sale : 

a.  The  brokerage  agreement. 

b.  The  agreement  that  street  rights  are  included  in  the  sale. 

c.  The  paragraph  describing  the  form  and  manner  of  execu- 

tion of  the  deed. 

d.  The  following  agreement :    "All  personal  property  appur- 

tenant to  or  used  in  the  operation  of  said  premises  is 


24 


PROBLEMS  IN  REAL  ESTATE 


represented  to  be  owned  by  the  seller  and  included  in 
this  sale." 

e.  The  agreement  that  the  deposit  shall  be  a  lien  upon  the 

property. 

f.  The  agreement  that  the  seller  shall  bear  the  risk  of  fire 

loss  until  the  closing. 

37.  A,  the  seller  and  B,  the  purchaser,  have  made  a  binding 
contract  for  the  sale  of  real  estate.  A  fails  to  complete  his  con- 
tract. What  remedies  has  B?  Assume  that  B  has  failed  to  carry 
out  the  contract.   What  remedies  has  A  ? 

38.  Name  the  differences  between  the  contract  for  sale  and  the 
contract  for  exchange  of  real  property. 

Chapter  VI 
AUCTION  SALES 

1.  A  owns  Whiteacre,  reasonably  worth  $75,000.  B  holds  a  first 
mortgage  of  $50,000  and  C  a  second  mortgage  of  $15,000  against 
the  property.  A  defaults  in  the  payment  of  interest  on  the  first 
mortgage  and  B  forecloses.  The  property  is  sold  at  auction.  Is 
this  a  voluntary  or  an  involuntary  auction  sale  ? 

2.  In  Problem  1,  is  it  legitimate  for  C  to  bid  at  the  sale? 

3.  In  problem  1,  to  what  extent  would  you  advise  B  to  bid  on  the 
sale. 

4.  A  dies,  leaving  two  children,  B  and  C.  He  owns  Blackacre 
which  is  reasonably  worth  $100,000.  He  owes  M,  N,  and  other 
creditors  $20,000.  Blackacre  is  sold  at  auction,  the  proceeds  to  be 
used  to  pay  the  creditors.  Is  this  a  voluntary  or  an  involuntary 
auction  sale? 

5.  Who  would  conduct  the  sale  of  the  property  referred  to  in 
problem  Number  1  ?   Where,  when  and  how  is  it  conducted  ? 

6.  Who  would  conduct  the  sale  of  the  property  referred  to  in 
Problem  Number  4?    Where,  when  and  howT  is  it  conducted? 

7.  What  are  the  terms  of  sale  and  what  is  their  purpose? 

8.  Why  is  the  sixth  clause  inserted  in  the  terms  of  sale? 

9.  Why  is  space  for  a  seventh  clause  inserted  in  the  terms  of 
sale? 

10.  What  instrument  takes  the  place  of  the  contract  at  an  auction 
.  sale?   In  what  manner  is  it  executed  so  that  each  party  signs  it? 

11.  In  what  respect  do  the  terms  of  sale  at  voluntary  auction 
sales  differ  from  those  at  an  involuntary  auction  sale? 


26 


PROBLEMS   IX   REAL  ESTATE 


12.  If  you  were  an  auctioneer  and  were  commissioned  to  sell  an 
estate  of  about  twenty  acres  in  an  outlying  section  of  your  city,  what 
methods  would  you  follow  to  insure  the  success  of  the  sale? 

13.  You  are  an  auctioneer  engaged  to  sell  real  property  at  a  vol- 
untary auction.  The  owner  informs  you  that  he  is  not  willing  to 
have  the  property  sold  for  less  than  $20,000.  Tell  him  two  methods 
by  which  this  may  be  accomplished  and  outline  your  own  procedure 
in  either  case  at  the  time  of  sale. 

14.  Discuss  the  advertisement  (page  28)  which  recently  appeared 
in  a  New  York  daily. 

Chapter  VII 
DEEDS 

1.  By  what  name  is  the  short  form  of  deed  in  general  use  known? 

2.  An  instrument  containing  all  the  usual  phraseology  of  a  deed 
contains  the  following  statement  inserted  following  the  habendum 
clause:  "the  party  of  the  second  part  agrees  to  reconvey  to  the 
party  of  the  first  part  the  premises  herein  described  upon  repayment 
of  a  loan  of  $5,000  to  secure  which  this  deed  is  given."  Is  this 
instrument  a  deed?    State  your  reasons. 

3.  Why  is  it  advisable  to  give  the  address  of  the  grantee  in  a 
deed? 

4.  A  owrns  certain  property  upon  which  B  holds  a  mortgage.  The 
interest  has  remained  unpaid  dii  the  mortgage  for  a  long  time  and 
the  aggregate  of  the  mortgage  and  interest  is  substantially  as  much 
as  the  value  of  the  property.  A  deeds  the  property  to  B  upon  B's 
agreement  to  cancel  the  mortgage.  Is  this  a  good  or  a  valuable 
consideration? 

5.  A  owns  YYhiteacre  which  is  reasonably  worth  $50,000.  B 
holds  a  mortgage  thereon  for  $25,000.  A  is  indebted  to  B,  C  and 
D  each  in  the  amount  of  $5,000.  A  conveys  the  property  to  B  upon 
B's  agreement  to  cancel  the  mortgage,  his  indebtedness,  and  upon 
his  giving  A  $20,000.    D  consults  you.    Advise  him. 

6.  Assume  in  the  previous  problem  that  B  paid  A  only  $10,000  in 
cash.    Advise  D  under  these  circumstances. 

7.  A  is  the  head  of  a  substantial  solvent  business.  His  daughter 
is  about  to  be  married.  He  presents  her  with  a  very  handsome 
home.    Very  soon  thereafter  he  sustains  large  business  losses  which 


of      ^  -^^r^fefc^ 


28 


rk()J',LKMS   l\   RKAL  ESTATE 


TO  EVERYONE 

who  lives  in  an  apartment 

Your  rent  has  been  raised  several  times 

You  probably  have  had  trouble  with  your  landlord 

You  have  been  worried 

Your  family  and  children  have  probably  had  disagreeable 

experiences  with  other  tenants 
You  might  have  had  to  move  if  it  had  not  been  for  the 

rent  law,  which  expires  in  1922 
You  may  not  be  able  to  lind  an  apartment  in  1922 

P  y  Y  Look  at  the  man  who  has  lived  in 

his  own  house  these  last  few  years 

He  hasn't  had  to  move 
He  hasn't  been  worried  by  increased  rent 
He  hasn't  been  bothered  by  the  landlord 
But  he  has  probably  had  several  chances  to  sell  his  own 
house  at  a  good  prolit 

When  you  live  in  your  own  house 

you  are  your  own  master 

You  can  bring  your  children  up  in  the  proper  surroundings 

The  rent  you  save  will  pay  off  your  mortgage 

The  increase  in  value  should  provide  for  your  old  age 

WHEN  THE  PRESENT  RENT  LAWS  EXPIRE  in  1922 

thousands  will  be  looking  for  houses  to  live  in 

Prices  of  houses  are  apt  to  increase.    If  you  choose  to  sell 

the  house  you  own  you  should  be  able  to  make  a  profit 

TOMORROW  AT  12  NOON 

at  the  Real  Estate  Exchange,  14  Vesey  Street 
15  One-Family  New  BRICK  PRIVATE  HOUSES 

ON  HOLLAND  AVENUE  two  blocks   from  Allerton  ave.  Subway 

Station  of  the  White  Plains  Line,  Bronx 

will  be  sold  at  an 

ABSOLUTE  AND  UNPROTECTED  AUCTION  SALE 

You  can  buy  the  houses  for  whatever  you  choose  to  pay 
They  will  be  sold  for  whatever  they  will  bring 
The  owners  will  not  bid  on  them  or  protect  them  in  any  way 
You  will  get  an  honest,  square  deal 
75  Per  Cent  May  Remain  on  Mortgage  Lots  25x100 

Tax  Exempt  10  Years  Restricted  Neighborhood 
f*l  ✓'V      Examine  the  Property  Today — Take  Lexington  Avenue 
I  -I  J      Subway  Train  marked  180th  Street — Change  at  180th 
Street  for  White  Plains  Line  Get  off  at  Allerton  Ave- 
nue Station. 

Send  for  Particulars  to 

J.  CLARENCE  DAVIES,  149th  St.  &  Third  Ave., 

JOSEPH  P.  DAY,  67  Liberty  St.,  New  York 

Agents  and  Auctioneers 


30 


I'kOHLKMS   IN    REAL  ESTATE 


render  him  insolvent.  Several  of  his  creditors  consult  you  with 
reference  to  their  rights,  if  any,  as  against  the  daughter.  Advise 
them. 

8.  Under  what  circumstances  should  the  purchaser  insist  that 
the  actual  consideration  be  stated  in  the  deed?  Why? 

9.  A  owns  Blackacre  appertaining  to  which  there  is  a  right  of 
way  over  Whiteacre  which  adjoins  Blackacre.  A  deeds  Blackacre 
to  B  and  says  nothing  about  the  right  of  way.  Does  the  right  of 
way  pass  to  B?  Why? 

10.  A  deed  conveying  a  farm  describes  the  property  partially  as 
follows:  "Beginning  at  a  milestone  at  the  junction  of  a  ditch  and 
Boston  Post  Road,  thence  northerly  along  the  westerly  side  of 
Boston  Post  Road  for  a  distance  of  1200  feet  to  the  intersection 
of  Jones'  fence  and  the  Boston  Post  Road."  Suppose  the  distance 
were  actually  1400  feet,  would  the  grantee  obtain  title  to  the  entire 
plot  or  only  part? 

1L  A  wishes  to  deed  Whiteacre  to  B  in  trust  for  C  during  Cs 
life.    How  may  this  fact  be  expressed  in  the  deed? 

12.  Explain  the  difference  between  a  patent  and  a  latent  defect 
in  the  description  in  a  deed. 

13.  A  who  owns  five  lots  in  the  town  of  Greenville  executes  to 
B  a  deed  which  recites  that  it  conveys  to  B  "any  one  of  my  five  lots 
in  Greenville."    Is  this  an  effectual  deed?  Why? 

14.  A's  property  is  one  hundred  feet  square  and  is  at  the  north- 
east corner  of  Broadway  and  Chambers  Street.  lie  executes  a  deed 
to  B  which  describes  the  property  as  being  one  hundred  feet  square 
and  being  at  the  northwest  corner  of  Broadway  and  Chambers 
Street.  A  owns  no  property  on  that  corner.  B  seeks  your  advice. 
Advise  him. 

15.  In  the  previous  problem  assume  that  B  did  not  discover  the 
error  but  fifteen  years  later  after  A  had  died,  B  contracted  to  sell 
the  property  to  C  and  C  seeks  your  advice.  What  would  you  tell 
him?  Why? 

16.  What  are  the  differences  between  the  bargain  and  sale  deed 
and  the  quit  claim  deed?    When  is  each  used? 

17.  Under  what  circumstances  would  you  advise  the  seller  to 
give  a  deed  containing  only  the  covenant  against  grantor's  acts? 

18.  Name  and  explain  each  of  the  covenants  in  the  warranty 
deed. 

19.  The  granting  clause  of  a  deed  reads :  "Unto  the  party  of 
the  second  part,  his  heirs  and  assigns  forever.''    And  the  habendum 


**^uic  ^w-^  #A*r~zs 


32 


PROBLEMS  IX  REAL  ESTATE 


clause  reads :  "Unto  the  party  of  the  second  part  for  and  during 
his  natural  life."    What  kind  of  an  estate  does  the  grantee  possess? 

20.  Is  it  advisable  for  a  deed  to  be  signed,  sealed,  witnessed  and 
acknowledged?  Which  of  these  is  necessary  ?  State  the  reason  for 
having  each  act  performed. 

21.  By  what  means  does  a  corporation  execute  an  instrument? 
What  is  the  most  important  act  in  such  execution? 

22.  A  conveys  Whiteacre  to  B  giving  B  a  full  covenant  and  war- 
ranty deed.  B  pays  $10,000  for  the  property.  Ten  years  later  C 
proves  that  he  owns  the  property  and  ejects  B.  At  that  time  the 
property  has  increased  in  value  to  $30,000.    What  may  B  do? 

23.  In  the  above  problem  assume  that  C  did  not  seek  to  prove  his 
ownership  to  the  property  but  went  to  B  and  threatened  to  eject  him. 
What  relief  would  B  have  against  A  under  these  circumstances? 

24.  Distinguish  between  a  "good"'  title  and  a  "marketable"  title. 

Chapter  YIII 
BONDS  AND  MORTGAGES 

1.  What  is  the  fundamental  difference  between  a  mortgage  and 
a  deed? 

2.  What  is  the  purpose  of  the  bond  and  the  mortgage  in  con- 
nection with  a  loan  upon  real  estate? 

3.  Why  is  a  bond  preferable  to  a  note? 

4.  Under  what  circumstances  would  you  substitute  the  wrords 
"gold  coin  of  the  United  States  of  the  present  standard  of  weight 
and  fineness"  for  the  words  "lawful  money  of  the  United  States," 
in  the  bond? 

5.  A  owns  an  apartment  house  upon  which  he  seeks  a  loan  of 
$20,000  at  5%  for  three  years.  B  is  willing  to  make  the  loan.  Draw 
that  part  of  the  bond  which  expresses  these  facts. 

6.  What  provisions  would  B  desire  inserted  in  the  bond? 

7.  What  provision  would  A  desire  inserted  in  the  bond  if  the 
property  were  reasonably  worth  $100,000? 

8.  A  owns  a  piece  of  property  reasonably  worth  $30,000.  It  is 
subject  to  a  first  mortgage  of  $15,000  with  interest  at  5%  ;  prin- 
cipal payable  January  1,  1923.  He  seeks  a  second  mortgage  of 
$5,000  to' run  for  three  years  with  interest  at  6%.  What  special 
clause  should  the  lender  have  inserted  in  such  a  mortgage  ?  What 
special  clause  should  the  borrower  have  inserted  in  such  a  mortgage  ? 


6. 


I  ^/T        TJJf         JLJ-       t  - 


34 


I'kOHLHMS   IX   REAL  ESTATE 


9.  A,  the  owner  of  property,  has  arranged  with  15,  the  lender, 
for  a  loan  of  $5,000  to  run  with  interest  at  6%  and  to  be  paid  in 
semi-annual  instalments  of  $500  together  with  interest.  A  is  to 
have  the  option  of  paying  more  than  $500  in  anticipation  of  future 
payments.    Draw  that  part  of  the  bond  which  expresses  these  facts. 

10.  John  Brown,  Incorporated,  being  badly  in  need  of  money, 
borrows  $45,000  from  P>,  giving  B  its  bond  and  mortgage  for  $50,000 
with  interest  at  6%.  Later  it  defaults  in  payment  of  interest.  B 
forecloses.  The  borrower  sets  up  the  defense  of  usury.  Who 
succeeds  ? 

11.  Is  it  advisable  to  have  a  fire  insurance  clause  in  the  bond 
and  mortgage?  Why? 

12.  Why  is  an  assignment  or  estoppel  clause  usually  included 
among  the  covenants  in  a  mortgage  ? 

13.  What  steps  would  you  take  in  buying  a  mortgage,  i.e.,  in 
having  a  mortgage  assigned  to  you? 

14.  On  March  1,  1916,  A  buys  Whiteacre.  On  March  10,  1916, 
A  borrows  $10,000  from  B  and  gives  \\  a  mortgage  on  Whiteacre. 
On  March  15,  1916,  A  marries  M.  On  March  20,  1916,  A  bor- 
rows $10,000  from  C  and  gives  C  a  second  mortgage  on  Whiteacre. 
On  the  same  day  A  purchases  from  D  Blackacre  and  gives  D  a 
purchase  money  mortgage  in  partial  payment.  Later  A  dies.  Is 
M's  dower  claim  prior  to  the  claims  of  B,  C  and  D? 

15.  In  the  above  problem  B  is  married.  lie  dies.  lias  his  wife 
any  dower  interest  in  the  mortgage?  Why? 

16.  A  owns  a  house  and  lot  in  San  Francisco,  California.  He 
borrows  $5,000  from  B,  giving  B  his  bond  and  a  mortgage  on  the 
property.  Later  A  and  B  both  establish  residences  in  Xew  York 
City,  New  York.  A  has  a  prosperous  business  in  Xew  York.  lie 
fails  to  pay  the  mortgage  when  due.  B  consults  you.  How  would 
you  advise  him  to  collect  his  claim? 

17.  L^pon  whom  does  the  burden  of  the  usury  laws  fall?  Give 
an  example  illustrating  your  answer. 

18.  A  holds  a  mortgage  upon  property  owned  by  B.  The  mort- 
gage is  executed  by  B  but  not  by  his  wife.  C,  who  is  about  to  pur- 
chase the  mortgage,  comes  to  you  for  advice.  What  would  you  tell 
him? 

19.  State  the  purpose  of  each  of  the  various  clauses  appearing 
in  the  mortgage  in  use  in  your  state. 

20.  B  owns  Whiteacre.  He  borrows  $10,000  from  A  and  gives 
A  his  bond  guaranteed  by  C  and  D  as  co-sureties.    B  also  gives  A 


Z*^A  \vJZu^ 


12 


36 


L'KOiiLEMS   IX    kKAL  ESTATE 


a  mortgage  on  Whiteacre  to  secure  the  loan.  Suppose  B  fails  to 
repay  the  loan  and  C  as  one  of  the  co-sureties  pays  A.  What  rights 
against  D,  B  and  A  lias  C? 

21.  A  owns  Blackacre.  He  borrows  from  B  $10,000  and  gives 
B  a  mortgage  on  the  property.  A  divides  Blackacre  into  ten  lots 
numbered  1  to  10  consecutively  and  sells  those  numbered  1  to  8. 
inclusive,  in  that  order  each  to  a  separate  purchaser,  who  either 
obtains  a  warranty  deed  or  pays  the  purchase  price  of  his  lot  in 
full  on  the  faith  that  the  blanket  mortgage  will  be  fully  discharged 
by  A.  A  fails  to  pay  B  who  forecloses  the  mortgage.  Which 
property  should  be  sold  to  satisfy  B's  mortgage  and  in  what  order? 

22.  A  owns  Whiteacre  which  is  a  plot  consisting  of  25  lots.  He 
borrows  $25,000  giving  as  security  a  blanket  mortgage  covering  the 
entire  plot.  He  intends  to  sell  the  lots  separately.  He  wishes  to 
make  an  arrangement  with  the  lender  under  which  a  fixed  pro- 
portion of  the  mortgage  may  be  paid  as  each  lot  is  sold  so  that  each 
lot  may  be  sold  free  and  clear  of  the  mortgage.  How  would  you 
arrange  this? 

23.  A  owns  Whiteacre  and  Blackacre  upon  which  B  holds  a 
blanket  mortgage  to  secure  $20,000.  In  B's  opinion  the  two  prop- 
erties are  of  equal  value.  C  holds  a  second  mortgage  covering 
W'hiteacre  alone.  A  wishes  to  have  B  release  Blackacre  from  the 
blanket  mortgage  and  offers  B  $10,000  on  account  of  the  mortgage 
for  a  release  of  Blackacre.  B  consults  you.  Advise  him  what 
steps  he  should  take  for  his  protection. 

24.  Why  is  it  important  to  record  the  satisfaction  piece  upon  the 
payment  of  a  mortgage? 

25.  State  why  it  is  customary  for  the  lender  to  seek  relief  by 
foreclosure  rather  than  an  action  on  the  bond. 

Chapter  IX 

TRANSFER  AXD  EXAMINATION  OF  TITLE  AXD  TITLE 

INSURANCE 

1.  If  an  owner  of  real  property  dies  intestate  and  in  no  other 
way  disposes  of  his  property,  to  whom  does  his  real  property  pass? 
Why?    By  what  name  is  the  means  of  transferring  title  known? 

2.  A  dies  leaving  a  last  Will  and  Testament  by  which  he  gives 
all  his  property  to  his  son,  B.  He  is  survived  by  his  wife  and  his 
three  children,  B,  C  and  D.  How  does  his  real  property  pass? 
Why? 


38 


PKOllLHMS   IX    RKAL  KSTATE 


3.  A  sells  his  house  and  lot  to  B  for  $10,000.  By  what  name  is 
the  means  of  transferring  title  known? 

4.  A's  property  is  covered  by  a  mortgage  held  by  B.  A  defaults 
in  the  mortgage  and  B  forecloses.  The  property  is  sold  at  public 
auction  by  a  referee  appointed  in  the  foreclosure  suit.  By  what 
name  is  the  means  of  transferring  title  known? 

5.  A  owns  an  apartment  house  occupied  by  B  as  tenant  and  seven 
other  tenants.  He  sells  the  house  to  B  who  continues  to  live  in  the 
house  and  collect  the  rents  from  the  other  tenants  but  who  fails  to 
record  his  deed.  Several  months  later  A  contracts  to  sell  the 
property  to  X.  X  has  the  title  examined  and  finds  the  record  title 
in  A.  X  then  pays  the  consideration  and  receives  a  deed  from  A 
which  he  at  once  records.  He  then  goes  to  the  property  and  de- 
mands possession,  which  B  refuses  to  deliver.  Advise  X  as  to 
his  rights. 

6.  A  owns  Whiteacre  and  borrows  $5,000  from  B,  giving  him 
a  bond  and  mortgage  covering  the  property.  On  the  following 
day  he  borrows  $5,000  from  C  giving  him  a  mortgage  on  the  prop- 
erty as  security.  B  is  taken  sick  and  for  that  reason  fails  to  record 
his  mortgage  until  after  C  has  recorded  his.  B  consults  you.  What 
advice  would  you  give  him  ? 

7.  Suppose  in  the  above  problem  that  B  made  his  loan  on  Tues- 
day afternoon  and  mentioned  it  to  C  Wednesday  morning,  C  mak- 
ing his  loan  Wednesday  afternoon.  What  would  your  advice  be 
under  these  circumstances? 

8.  Assume  in  the  above  problem  that  B  made  his  loan  Tuesday 
afternoon  and  C  made  his  loan  Wednesday  afternoon  and  while  he 
was  on  his  way  to  record  his  mortgage  Thursday  morning  he  met 
B  who  told  him  of  his  previous  loan.  Would  this  alter  your  answer? 
Why? 

9.  B  has  bought  a  piece  of  property  from  A,  receiving  a  deed 
which  is  signed  by  A,  sealed,  and  witnessed  by  C  but  has  not  been 
acknowledged.  B  attempts  to  record  it  and  fails.  Why?  How- 
would  you  help  him  ? 

10.  State  briefly  the  contents  of  an  "abstract  of  title/'  How- 
does  it  differ  from  a  "chain  of  title  ?" 

11.  You  are  a  skilled  title  examiner  and  have  been  engaged  by 
B  to  search  the  title  to  certain  premises  which  he  is  purchasing  from 
A.  In  examining  the  record  you  find  among  other  things  a  deed 
in  the  chain  of  title  made  by  X  and  Y  which  recites  that  X  and  Y 
are  the  sole  heirs  at  law  of  the  preceding  record  owner.  You 


40 


PROBLEMS  IN  REAL  ESTATE 


certify  that  the  title  may  be  conveyed  by  A.  B  purchases  relying 
upon  your  certificate.  Later  it  develops  that  Z  was  also  an  heir  at 
law.  Are  you  responsible  for  any  damage  sustained  by  B?  State 
the  title  examiner's  responsibility. 

12.  In  what  fundamental  respect  does  title  insurance  differ  from 
fire  insurance?  Why  should  one  always  insist  upon  a  "report  of 
title"  before  closing  the  title? 

13.  What  is  the  purpose  of  the  "schedule  of  exceptions"  in  a 
title  insurance  policy  ? 

14.  How  does  a  policy  of  title  insurance  issued  to  a  mortgagee 
differ  from  a  policy  issued  to  an  owner? 

15.  Suppose  you  purchased  a  piece  of  property  and  had  the  title 
examined  and  insured  by  a  title  company  for  $50,000.  After  buy- 
ing the  property  you  enter  into  a  contract  with  C  whereby  C  agrees 
to  purchase  the  property  for  $60,000.  C  claims  the  title  is  defective 
and  refuses  to  take  the  property.    What  remedy  have  you? 

16.  A  owns  Whiteacre  which  is  insured  by  a  title  company  for 
$100,000.  A  dies  leaving  Whiteacre  to  B,  his  son.  B  sells  White- 
acre  to  C  for  $200,000  and  gives  C  a  full  covenant  and  warranty 
deed.  Later  C  attempts  to  sell  Whiteacre  to  D  and  an  ancient 
defect  in  the  title  is  discovered.    What  may  C  do? 

17.  Suppose  that  a  title  company  is  liable  under  its  policy  to  pay 
the  full  amount  of  insurance.  What  reciprocal  right  would  the 
title  company  have? 

18.  How  should  the  property,  title  to  which  is  insured,  be  de- 
scribed in  the  title  policy? 

19.  You  are  about  to  sell  a  piece  of  property  title  to  which  was 
insured  in  you.    To  what  use  would  you  put  the  policy? 

20.  Why  is  a  survey  advisable  in  addition  to  an  examination  of 
the  records? 

Chapter  X 
CLOSING  OF  TITLE 

1.  A  on  April  1st  signs  a  contract  to  sell  Whiteacre  to  B.  He 
executes  a  deed  dated  May  1st  and  the  title  is  closed  on  June  1st. 
On  what  date  did  title  pass? 

2.  Explain  the  theory  under  which  adjustments  are  made  at 
the  closing  of  title? 

3.  B  is  about  to  purchase  an  eight-family  house  from  A.  What 
information  should  B  require  from  A  with  reference  to  the  tenants 
upon  the  closing  of  title? 


42 


PROBLEMS  IN  REAL  ESTATE 


4.  A  has  contracted  to  sell  Whiteacre  to  B  subject  to  taxes,  a 
$5,000  mortgage,  and  certain  restrictions.  The  report  of  title 
shows  numerous  unpaid  taxes,  and  an  unpaid  assessment  for  high- 
way improvement  in  front  of  the  property,  a  mortgage  for  $6,000, 
a  junior  mortgage  for  $1,500.  a  judgment  against  A  for  $500  and 
the  restrictions  mentioned  in  the  contract.  You  are  representing  B 
on  the  closing  of  title.  Advise  him  with  reference  to  each  encum- 
brance.   What  disposition  should  be  made  of  it  and  by  whom? 

5.  Upon  the  closing  of  title  why  should  special  scrutiny  be  given 
to  restrictive  and  other  covenants  affecting  the  property  ? 

6.  A  has  contracted  to  sell  Number  10  Fourth  Street  to  B  for 
$30,000,  $2,000  of  which  was  paid  on  the  signing  of  the  contract. 
$8,000  is  to  be  paid  on  the  closing.  The  purchaser  is  to  take  title 
subject  to  an  existing  mortgage  of  $15,000  with  interest  at  5% 
per  annum  payable  semi-annually,  the  last  interest  having  come 
due  and  been  paid  two  months  before  the  closing  of  title.  The 
balance  of  the  purchase  price  is  to  be  paid  by  a  bond  and  pur- 
chase money  mortgage  for  $5,000  to  run  with  interest  at  6<fo 
for  three  years.  The  property  is  rented  to  three  tenants  whose 
rents  are  respectively  $100,  $75  and  $50  per  month  due  and 
payable  on  the  first  of  each  month.  Their  rent  is  paid  for  the 
month  in  which  title  is  closed;  title  being  closed  on  the  15th  of 
the  month.  There  is  a  fire  insurance  policy  upon  the  property 
for  three  years ;  premium  $36,  which  was  issued  nine  months 
prior  to  the  day  of  closing  title.  Draw  up  the  statement  of  ad- 
justments for  the  above  transaction  showing  the  credits  due  each 
party  and  the  net  balance  to  be  paid. 

7.  In  the  above  problem  what  additional  items  for  expenses 
in  connection  with  the  closing  of  title  would  the  purchaser 
customarily   have   to  pay? 

8.  Assume  in  the  above  problem  that  a  mortgage  covering 
the  property  was  to  be  satisfied  on  the  closing.  Suggest  a  satis- 
factory arrangement  for  this  purpose. 

9.  What  is  the  purpose  of  an  affidavit  of  title  taken  upon 
the  closing? 

10.  A  is  the  owner  of  a  lease  covering  an  apartment  house. 
He  has  contracted  to  sell  the  lease  to  B  who  retains  you  to 
represent  him  on  the  closing.  What  facts  would  you  ascertain 
for  the  purpose  of  making  the  adjustments  on  the  closing  and 
which  of  the  parties  should  receive  credit  for  each  item  as- 
certained? 


G 


0 


'3L&  t  Cr-&-& 


J2  7 


//  a. 


44 


I'ROI'.LKMS   IX    UKAL  RSTATR 


11.  Upon  the  making  of  a  mortgage  loan,  name  the  items 
which  usually  arise  for  adjustment.  Who  customarily  pays 
them? 

12.  Assume  in  the  sixth  problem  that  it  has  been  agreed  that 
B  instead  of  giving  a  purchase  money  mortgage  for  $5,000,  on 
closing,  shall  deed  to  A  a  piece  of  property  agreed  to  be  worth 
$8,000,  upon  which  there  is  a  mortgage  for  $3,000  with  interest 
at  5%,  the  interest  having  been  paid  up  to  one  month  prior 
to  the  closing  of  title.  Draw  up  the  statement  of  adjustments 
for  the  entire  transaction. 

Chapter  XI 
LEASES 

1.  I  low  does  the  relation  of  landlord  and  tenant  arise? 

2.  What  is  the  agreement  between  landlord  and  tenant  called, 
and  what  are  the  essential  things  agreed  upon  in  it? 

3.  Alust  rent  be  paid  in  money?  Under  what  circumstances 
would  you  make  an  agreement  at  a  nominal  rent? 

4.  When  must  the  agreement  between  landlord  and  tenant 
be  in  writing?    Is  recording  desirable  or  necessary? 

5.  A  hires  a  Hat  from  B  for  one  month  at  a  rent  of  $50.  Must 
A  give  notice  if  he  intends  to  remove  at  the  end  of  the  month? 

6.  If  in  Problem  5,  A  had  taken  the  flat  at  a  rental  of  $50 
per  month,  no  mention  being  made  as  to  the  length  of  the  term, 
what  kind  of  a  tenancy  would  exist?    When  would  it  end? 

7.  If,  in  Problem  5,  A  remained  in  possession  after  the  end 
of  the  month,  what  would  B  have  to  do  to  make  him  remove? 

8.  M  leases  a  building  to  X  for  eighteen  months.  At  the  end 
of  the  term  X'  remains  in  possession  and  M  accepts  rent.  Six 
months  later  M  notifies  N  to  remove.  Can  M  recover  possession 
against  the  will  of  X? 

9.  O,  an  operator,  is  offered  a  parcel  of  land  on  a  long  term 
lease  for  $25,000  per  year.  He  estimates  the  cost  of  a  proper 
building  for  the  site  to  be  $1,000,000.  How  would  he  determine 
whether  the  enterprise  could  be  undertaken  profitably? 

10.  Assume  the  lease  for  the  property  (Problem  9)  was  made 
to  O  on  July  1,  1921.  On  April  1,  1921,  R,  the  owner,  had 
made  a  mortgage  on  the  property  to  M  for  $100,000.  On 
October  1,  1921,  O  borrows  $500,000  from  P,  his  partner,  giving 
him  a  mortgage  on  the  leasehold  as  security.    The  building  was 


to, 


46 


L'ROl'.LKMS   IX    KKAL  KSTATK 


to  be  finished  January  1,  1922,  and  during  the  month  of  October 
leases  for  space  in  it  are  made  to  X,  Y  and  Z.  What  is  the 
result  of  a  default  in  the  mortgage  held  by  P?  What  is  the 
result  of  a  default  in  the  mortgage  held  by  M  ? 

11.  L  rents  to  T  an  apartment  on  the  sixth  floor  in  a  modern 
elevator  apartment  for  three  years  at  $150  per  month.  After 
being  in  the  apartment  a  few  months  the  elevator  service  is 
discontinued.    May  T  remove? 

12.  Suppose  that  workmen  in  the  course  of  making  repairs 
to  the  property  (Problem  11)  had  uncovered  part  of  the  roof 
and  while  in  that  condition  a  heavy  storm  had  caused  consider- 
able damage  to  T's  rugs  and  furniture.  To  whom  could  T  look 
for  reimbursement  ? 

13.  Suppose  that  the  storm  (Problem  12)  had  merely  dis- 
colored some  wall  paper  in  T's  apartment.  Who  would  have  to 
repair  it?  Suppose  that  when  T  removed,  the  owner  found  the 
floors  injured  on  account  of  a  piano  being  moved  on  them,  and 
the  walls  broken  by  careless  handling  of  furniture.  Who  could 
be  held  for  the  expense  of  repairing  the  damage? 

14.  T  (Problem  11)  on  moving  into  his  apartment  had  a 
small  safe  built  into  the  wall  at  his  own  expense.  Could  he  take 
this   out  when  removing"? 

15.  Suppose  B,  a  tenant  under  lease,  fails  to  pay  his  rent 
when  due.  What  action  may  A,  the  owner,  take?  Would  such 
action  break  the  lease?  What  other  circumstances  may  break 
the  lease  ? 

16.  X  leases  a  building  to  Y  at  $250  per  month.  Later,  the 
rent  is  not  paid  for  three  successive  months.  X  threatens  to  sue 
Y,  who  informs  him  that  he  has  failed  in  business  and  that  Z 
has  been  in  possession  for  two  months  as  assignee  of  his  lease. 
Can  X  sue  Z  and,  if  so,  for  how  much?  Can  X  break  the  lease 
if  Z  pays  the  rent? 

17.  What  is  the  important  covenant  of  the  landlord  in  an 
ordinary  lease?    What  other  covenants  does  the  landlord  make? 

Chapter  XII 
BROKERAGE 

1.  A  broker  learns  that  a  certain  automobile  concern  con- 
templates locating  a  salesroom  and  service  station  in  his  town. 
What  action  should  he  take? 


48 


I'KOIILKMS   IX    REAL  KSTA'I  K 


2.  A  broker  knows  that  the  lease  on  a  store  on  a  good  retail 
business  block  will  shortly  expire.  Jle  believes  that  the  store 
should  bfiag  twice  its  present  rent.  How  may  he  profit  by  his 
know  ledge? 

3.  A  tells  B  that  if  I»  will  erect  a  three  story  building  in  a 
certain  locality  he  will  rent  it  for  him  on  a  twenty-one-year 
lease.  W  ith  such  a  lease  Ji  can  sell  the  property  to  C,  an  in 
vestor.  B  goes  U>  a  broker  to  see  if  a  plot  for  the  building  can 
be  purchased,  and  explains  to  the  broker  that  he  has  only  a  lim- 
ited amount  of  cash.  Suggest  how  the  deal  might  be  worked 
out  by  the  broker.  Suppose  the  entire  deal  originated  with  the 
broker,  how  many  commissions  could  he  earn  ? 

4.  A,  an  owner,  places  a  "For  Sale"  sign  on  his  house.  B, 
a  broker,  sees  the  sign  and  brings  a  prospective  purchaser  to  the 
house.  An  offer  is  made  and  accepted.  Later  the  sale  is  closed 
and  B  hands  A  a  bill  for  commission  on  the  sale.  A  refuses 
to  pay  it.    Can  B  recover? 

5.  A  broker  has  a  customer  for  a  factory  building.  He  ap- 
proaches the  president  of  the  X  corporation  and  asks  if  they  will 
sell  one  of  their  buildings.  The  official  states  that  they  will  sell 
and  names  price  and  terms.  The  broker  introduces  his  customer 
and  a  sale  is  consummated.  The  sellers  refuse  to  pay  the  brok- 
er's commission,  however.    Can  he  recover  against  them? 

6.  Suppose  the  X  corporation  (problem  5),  through  their  offi- 
cials, had  had  previous  real  estate  transactions  with  the  broker. 
Would  that  affect  your  opinion?  Would  it  affect  your  opinion  if 
it  was  shown  that  the  president  of  X  corporation  knew  the  broker 
personally  and  knew  that  his  business  was  that  of  a  real  estate 
broker? 

7.  N,  a  farmer,  calls  at  the  office  of  M,  a  local  broker,  and 
asks  him  to  secure  a  customer  for  h:s  farm.  His  price  is  $7,500, 
and  he  states  the  farm  consists  of  7  1-2  acres  of  land,  a  house 
and  a  barn.  Later  the  broker  tells  N  he  has  received  an  offer 
of  $7,000.  X  accepts  this  offer  and  a  deposit  is  paid  and  a 
contract  signed.  Is  M  entitled  to  a  commission?  If  so,  who 
pays  it  ? 

8.  Suppose  that  the  customer  (Problem  7)  had  told  M  that 
if  he  could  get  the  faro  for  less  than  $7,500  he  would  share 
the  saving  with  him.  Would  this  affect  M's  claim  for  com- 
mission from  N  ? 

9.  Suppose  that  it  was  shown  that  the  customer  (Problem  7) 


50 


PkOULEMS   IX    REAL  ESTATE 


was  a  representative  of  M,  and  that  there  was  a  subsequent  con- 
tract to  resell  the  property  to  X  for  $8,000.  Would  N  have  to  pay 
a  commission?    Who  would  get  the  profit  on  the  resale? 

10.  A  is  authorized  to  sell  property  belonging  to  B  for  $25,000 
cash.  A  obtains  an  offer  of  $18,000,  which  is  declined.  He 
later  says  that  C  is  his  party  and  that  he  will  pay  $20,000,  half 
cash  and  half  mortgage.  This  is  also  declined.  Two  weeks  later 
B  notifies  A  that  his  authority  to  sell  the  property  is  withdrawn. 
C  then  goes  direct  to  B  and  buys  the  property  for  S22, 000  cash. 
A  clajms  a  commission  on  the  ground  that  C  was  his  customer. 
Can  he  recover? 

11.  The  customer  (Problem  7)  declines  to  complete  his  con- 
tract and  take  title  to  the  farm  on  the  ground  that  a  survey  shows 
that  there  are  only  7  acres  of  land  in  it.  A  suit  on  the  con- 
tract is  decided  in  favor  of  the  customer.  If  M  has  received  a 
commission  must  he  refund  it  ? 

12.  A  seller's  price  for  a  tract  of  land  is  $250,000.  A  firm  of 
brokers  submit  an  offer  of  $175,000,  expecting  to  receive  the 
customary  commission  of  5%.  The  seller  accepts  the  offer 
but  stipulates  that  the  brokers  be  paid  only  2%.  The  brokers 
sign  the  stipulation  regarding  commission  and  a  contract  of  sale 
is  executed.  Later  the  brokers  make  a  claim  for  the  regular 
commission.    How  much  may  they  recover? 

I.7).  An  owner  tells  a  broker  that  he  would  like  to  sell  a  garage 
building,  good-will  and  equipment.  The  broker  asks  for  price 
and  terms  and  is  told  to  bring  any  customer  he  may  have  and 
terms  will  be  arranged  and  a  commission  paid.  The  broker 
has  a  party  who  has  offered  him  $500  if  he  could  find  him  a  ga- 
rage with  a  going  business.  The  principals  meet  and  a  sale  is 
made.     Can  the  broker  recover  from  both  sides? 

14.  A  authorizes  B  to  sell  his  house.  B  brings  C  to  the  house 
but  finds  it  closed  and  cannot  show  it.  C  meets  A  on  the  street 
and  says  that  he  understands  A  wishes  to  sell  his  house.  A  and 
C  enter  into  a  contract,  nothing  being  said  about  the  broker. 
Can  B  recover  a  commission? 

15.  X  is  authorized  to  sell  a  house  for  Y.  He  knows  that  Y 
wishes  to  buy  a  larger  house  and  suggests  a  trade  for  a  house 
belonging  to  Z.  Z  is  approached  and  agrees  to  make  the  trade 
and  pay  X  a  commission.  How  should  X  protect  himself  so  as 
to  get  a  commission  from  both  parties? 


52 


PROBLEMS  IN  REAL  ESTATE 


Chapter  XIII 
MANAGEMENT 

1.  An  out  of  town  manufacturer  acquires  a  city  loft  build 
ing  as  the  result  of  the  foreclosure  of  a  mortgage.  The  building 
is  run  down  and  only  partially  rented.  He  tells  you  that  he  in- 
tends to  engage  a  contractor  to  repair  the  building  and  that  he 
will  advertise  for  tenants.  What  advice  would  you  give  him? 
Why? 

2.  Suppose  the  building  (Problem  1)  was  especially  suitable  for 
the  printing  business.  What  method  should  be  pursued  in  renting 
it? 

3.  You  are  managing  a  building  occupied  largely  by  whole- 
sale dealers  in  silks  and  dress  goods.  The  top  floor  becomes 
vacant  and  a  manufacturer  of  suits  applies  for  it.  Would  you 
rent  it  to  him?    Give  reasons. 

4.  A  store  has  been  vacant  for  some  time  and  an  offer  is  made 
for  it,  the  prospective  tenant  requiring  a  long-term  lease.  What 
considerations  would  affect  your  judgment  as  to  the  length  of 
lease  to  grant  him? 

5.  Would  a  tenant  be  wise  in  taking  a  short-term  lease  of  a 
public  garage  he  proposes  to  operate?  Why? 

6.  What  attention  should  be  given  to  complaints  of  tenants? 

7.  A  manufacturer  has  a  long-term  lease  on  a  building  under 
your  management.  lie  is  unable  to  ship  goods  owing  to  freight 
congestion  and  does  not  pay  his  rent.  Would  you  disposses  him? 
Explain. 

8.  You  are  managing  some  apartment  houses  for  an  estate. 
One  of  the  heirs  complains  of  insufficient  income  and  asks  you 
to  reduce  repair  bills.  What  points  would  you  bring  out  in  a  dis- 
cussion wTith  him? 

9.  What  insurance  policies  would  you  advise  an  owner  to 
carry  ? 

Chapter  XIV 
THE  VALUATION  OF  REAL  ESTATE 

1.  What  determines  the  value  of  farm  land? 

2.  Why  has  vacant  land  in  cities  any  value? 

3.  State  the  location  of  land  in  your  city,  town  or  borough 
used  for  three  different  purposes.  W'hich  is  the  most  valuable? 
Which  ranks  second  as  to  value? 


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54 


PROBLEMS  IX  REAL  ESTATE 


4.  At  what  point  did  your  community  start?  Why  did  it  start 
there?    In  what  direction  or  directions  has  it  grown?  Why? 

5.  What  is  a  standard  or  typical  lot?    I  low  is  it  valued? 

6.  What  physical  features  of  city  lots  affect  their  value?  What 
neighboring  influences? 

7.  In  what  way  do  transit  facilities  affect  land  values?  Does 
the  amount  of  fare  from  the  section  to  other  sections  have  any 
effect? 

8.  A  goes  to  an  auction  and  finds  a  crowd  buying  lots  at  prices 
running  from  $800  to  $1,000  each.  He  has  some  money  to 
invest.  Can  he  assume  that  the  lots  are  cheap  at  the  prices  the 
crowd  is  paying? 

9.  If  a  standard  lot  in  a  certain  block  is  worth  $5,000,  what 
is  the  value  of  a  lot  75  feet  in  depth  on  one  side  and  85  feet 
deep  on  the  other  side.    How  did  you  obtain  your  answers? 

10.  A,  B  and  C  each  own  one  of  three  contiguous  lots  20 
feet  wide  by  100  feet  deep.  They  try  to  sell  independently  and 
get  offers  of  $1,000  each.  A  builder  comes  to  them  and  says 
he  will  pay  $4,500  for  the  three.  Why  are  the  three  together 
worth  more  than  each  one  separately? 

11.  Why  are  corner  lots  more  valuable  than  inside  lots? 
What  is  the  usual  added  value  for  corners?  Is  this  ratio  always 
correct  ? 

12.  You  are  asked  to  value  a  plot  60  x  120  on  which  is 
erected  a  modern  four-story  apartment  building.  How  would 
you  proceed? 

13.  You  are  valuing  a  piece  of  property  in  a  business  section 
of  a  city.  The  land  you  believe  to  be  worth  $50,000.  There  is 
a  brick  dwelling  on  the  land  in  a  good  state  of  repair.  How 
would  you  fix  the  value  of  the  building? 

14.  Would  the  rents  produced  by  the  building  referred  to  in 
Problem  12  help  you  in  forming  an  opinion  of  the  value  of  the 
property?  If  so,  how?  Could  you  tell  how  much  of  the  rent 
applied  to  the  economic  or  ground  rent?  Would  temporary  or 
war  conditions  of  renting  have  to  be  taken  into  account? 

15.  A  corner  plot  A  is  located  at  the  southwest  corner  of 
Broad  and  Race  Streets,  fronting  50  feet  on  Broad  Street  and 
60  feet  on  Race  Street.  The  adjoining  plot  B  has  a  frontage  of 
20  feet  on  Broad  Street  and  a  depth  of  90  feet.  Plot  C  adjoins 
B  and  is  the  same  size  as  B.  Plot  D  adjoins  A  and  has  a  frontage 
of  30  feet  on  Race  Street  and  a  depth  of  50  feet.    Plot  E  ad- 


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joins  D  and  is  25  feet  front  by  100  feet  deep.  Broad  Street 
standard  lots  25  x  100  are  worth  $30,000,  and  Race  Street  lota 
are  worth  $10,000.  Value  lots  A,  13,  C,  D,  E  separately  and  the 
plot  as  a  whole. 

Chapter  XV 
MORTGAGE  LOANS 

1.  An  investor  has  $20,000  in  cash.  He  is  offered  two  build- 
ings at  a  price  of  $20,000  each.  The  houses  each  rent  for  $2,000 
per  year,  lie  is  undecided  as  to  whether  to  buy  one  of  the 
buildings,  or  both.    How  would  you  advise  him? 

2.  An  owner  has  a  piece  of  property  on  which  there  is  an 
old  dwelling  rented  at  $25  per  month.  The  property  is  worth 
$10,000.  He  does  not  want  to  sell  it  but  has  no  money  to  im- 
prove it.  Show  him  how  he  can  better  his  income  from  this 
property. 

3.  State  the  advantages  or  disadvantages  of  mortgages  com- 
pared with  other  forms  of  investments. 

4.  You  have  funds  to  invest  and  are  offered  mortgages  on 
property  as  follows : 

(a)  Retail  stores—      Value;  land  $150,000,  building  $  25,000 

(b)  Dwelling  Value;  land       2,000,  building  8,000 

(c)  Dwelling  Value;  land      50,000,  building  200,000 

(d)  Garage  Value  I  land  20,000,  building  30,00C 
Howr  much  would  you  lend  on  each  of  these  properties?  Which 

of  them  would  you  prefer? 

5.  You  hold  a  mortgage  of  $6,000  made  ten  years  ago  on  a 
piece  of  property  worth  $10,000.  The  improvement  is  a  two- 
family  house.  You  are  asked  to  make  a  loan  on  a  similar  build- 
ing just  erected.  The  cost  of  the  new  building  is  $12,000,  and 
the  lot  is  worth  $3,000.    How  much  would  you  lend  on  it? 

6.  What  important  safeguards  should  be  availed  of  by  a  per- 
son making  a  mortgage  investment? 

7.  A  builder  erects  a  loft  building  in  a  section  where  there 
is  a  ready  market  for  the  space  at  good  rentals.  He  negotiates 
for  a  first  mortgage  loan,  and  a  broker  says  he  has  a  lender 
who  will  make  the  loan  for  ten  years  with  interest  at  6%  and 
with  a  provision  that  4%  of  the  principal  be  paid  of!  each  year 
in  quarterly  installments.  What  are  the  advantages  of  such 
a  loan  to  the  borrower?    To  the  lender? 


58 


['ROIILEMS   IX   REAL  ESTATE 


8.  A  borrows  $10,000  on  a  three-year  mortgage  on  his  house 
from  B.  A  year  later  A  sells  the  house  to  C.  What  should  he 
do  when  the  mortgage  becomes  due?  Why? 

9.  A  lends  $10,000  to  1j  on  a  piece  of  property  valued  at 
$20,000,  of  which  $15,000  was  land  value.  Me  also  lends  $25,000 
to  C  on  a  piece  of  property  valued  at  $45,000,  of  which  $5,000 
was  land  value.  I  low  much  fire  insurance  should  he  require  in 
connection  with  each  of  these  loans? 

10.  Explain  briefly  how  a  farmer  may  borrow  $2,500  on  his 
farm  under  the  provisions  of  the  Federal  Farm  Loan  Act.  W  hat 
are  the  purposes  for  which  he  may  borrow  the  mane)  ?  Where 
does  the  money  for  his  loan  come  from? 

11.  How  may  an  investment  in  one  mortgage  be  made  by  a 
number  of  individuals? 

12.  A  lady  has  a  fund  of  $50,000  for  investment.  She  asks 
your  advice  on  guaranteed  mortgages.  What  would  your  advice 
be? 

13.  X  owns  ten  unimproved  lots.  A  builder  offers  to  buy 
them  at  a  good  price  but  says  he  must  have  building  loans  on 
the  houses  he  will  erect  on  the  lots.  He  also  says  he  cannot  pay 
cash  for  the  lots.  Suggest  a  deal  which  might  be  arranged  be- 
tween these  parties. 

14.  A  corporation  purchases  several  income  producing  build- 
ings subject  to  existing  first  mortgages.  It  then  issues  a  series  of 
bonds  which  it  calls  "6%  Real  Estate  Gold  Bonds''  and  adver- 
tises them  for  sale  to  investors.  Are  these  bonds  a  good  invest- 
ment?   What  kind  of  bonds  are  they? 

*    15.   What  information  should  a  broker  have  when  he  seeks 
to  place  a  mortgage  loan? 

Chapter  XYI 
THE  WORK  OF  THE  ARCHITECT 

1.  A  speculative  builder  is  offered  a  plot  of  land  located  be- 
tween two  large  apartment  houses.  Should  he  consult  an  archi- 
tect before  buying  the  land? 

2.  What  information  should  the  builder  obtain  from  the 
architect?  Why? 

3.  A  manufacturing  firm  owns  several  acres  of  land  ad- 
joining its  factories.    They  wish  to  extend  the  plant  by  the  erec- 


60 


I'KOIiLKMS   IX   R HAL  ESTATE 


ttOfl  of  another  building.     What  information  should  the  archi 
tect  have   in  order  to  make   preliminary   drawings?  Mention 
some  of  the  things  he  must  consider  in  making  finished  drawings. 

4.  Explain  the  use  in  connection  with  a  building  operation  of 
(a)  rough  sketches,  (b)  finished  plans,  (c)  specifications,  (dj 
surveys. 

5.  An  owner  obtains  bids  on  a  proposed  building  from  several 
contractors  and  finds  them  all  to  be  higher  than  he  expected.  He 
thinks  the  work  could  be  done  for  less.  Tell  him  about  other  meth- 
ods of  paying  contractors  for  work,  and  discuss  the  advantages 
or  disadvantages  of  them. 

6.  What  services  other  than  drawing  sketches  and  plans  may 
an  architect  render  to  an  owner? 

7.  When  should  a  mortgagee  seek  the  advice  of  an  architect? 

Chapter  XVII 

THE  TORRENS  SYSTEM  OF  LAND  TITLE 
REGISTRATK  >\ 

1.  A  contracts  to  purchase  an  improved  parcel  of  real  estate 
from  B.  B  has  owned  the  property  for  five  years  and  the  title 
was  examined  when  he  bought  it.  Would  you  advise  A  to  have 
it  re-examined  now?  Why? 

2.  A  does  not  know  B  and  is  undecided  about  making  a  con- 
tract with  him  and  paying  him  a  deposit.  He  thinks  he  should 
have  some  information  about  the  title  to  the  property.  Can  he 
obtain  this  speedily?  Would  it  help  the  matter  if  B  had  a  reg- 
istered title? 

3.  If  B  had  a  registered  title  how  long  would  it  take  to  trans- 
fer it  to  A? 

4.  If  B's  title  was  not  registered,  could  A  apply  for  registration 
after  the  contract  was  signed?  How  long  would  the  proceeding 
take? 

5.  A  asks  you  for  advice  as  to  the  advisability  of  having  title 
insurance  or  registration  under  the  Torrens  law.  He  asks  espe- 
cially about  (1)  expense  (2)  length  of  time  to  complete  (3) 
results. 

6.  Does  the  Torrens  law  in  your  state  permit  property  to  be 
withdrawn  after  once  being  registered?  Is  this  an  advantage  or 
a  disadvantage? 


62 


I'KOI'.LKMS   IN   RKAL  INSTATE 


7.  A  died  intestate  leaving  four  children  living  at  his  home. 
A  fifth,  U,  had  left  home  ten  years  previous  and  had  not  been 
heard  from.  The  four  children  assume  15  to  be  dead  and  pro- 
ceed to  divide  the  father's  estate.  They  sell  a  parcel  of  the 
real  estate  and  the  purchaser  proceeds  to  have  the  title  to  it  reg- 
istered. Two  weeks  after  an  order  of  registration  had  been 
granted  by  the  court  B  appears  and  demands  his  share  of  the 
estate.  Can  he  have  the  order  of  registration  set  aside?  Sup- 
pose he  did  not  come  back  until  a  year  after  the  order  had 
been  signed.    Would  he  still  be  able  to  set  it  aside? 

8.  If  he  could  not  get  his  one-fifth  interest  in  the  registered 
property  could  he  recover  its  value  from  anyone?    If  so,  how? 

9.  Have  B's  constitutional  rights  been  violated  by  the  regis- 
tration in  another  of  property  in  which  lawfully  he  had  an 
interest? 

10.  Suppose  the  four  brothers  of  B  had  had  the  tit1e  registered 
in  them  in  order  to  prevent  any  claim  by  B  should  he  appear. 
He  does  appear  a  year  later.  What  can  he  do  to  get  his  share  oi 
the  estate? 


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